Speculation! Past Charts! Historians! Hope! (Thank God for the Hope!) are some ideas of where we get the future of the Real Estate Market. Physics! “what goes up must go down” …Darwin
Speculation lay a way of wondering about any event. Even if you plan an event from morsel to music! The Event has too many variables to be predicted or speculated to a perfect dream in your mind…or anyones mind.
Historians! I must say I believe this is important to know to learn from mistakes. In knowing History, you need to know both sides, all of it, more of it! to actually understand the whole story! Its hard to take one point and leave the others parts of a story out. Somehow all parts of a story make it “why” it happened, turned out the way it did…etc.
Example: Real Estate plummeted in the late 80’s due to Co-ops, high interest rates, economic issues, and honestly as I write this I need to investigate and learn more. But the point will be simple. The housing market fell at a peak. Which is basically what has occured now. There was a peak. The peak was fed by….high interest rates, job losses, onset of war…etc.
In this now case the peak was fed by a few big Considerations!: Fannie Mae and Freddie Mac dropping the standards in which they would back and buy loans from lenders (1999), September 11th, 2001; Down turn in the stock market driving Stock holders to purchase land and property, the sub prime mortgage lending (from those who didn’t understand, to those who did and used it to get the keeping up with the jones’ home that was unrealistic to their income, to large companies deciding to become mortgage lenders, to ignoring common sensibility, to wanting it now, to thinking the money would keep coming in, to not caring what 3 years would bring…….Should I keep going on?)
Okay…so basically to create home ownership opportunity to those who may have under credit scores, lesser income, that would normally not qualify for a mortgage… Fannie Mae and Freddie Mac standards were voted to be dropped. As everything in life…it takes time for a new idea to really sprout!
Now with all of the middle east concerns, world problems of terrorism! 9-11 occurs Oh oh! time to let go of stocks, not buy stocks, BUY LAND, BUY HOMES! Real Estate became the new thing to invest in…which I believe was not the problem! Its smart to buy tangible, concrete property! Everyone needs a home! A place to do business, run a farm, raise a family…… This was not the problem. But it did make many who may not of thought of it before do it. Still not the problem!
Prices go up! Sellers Market! Loans are much easier to get! No document loans, Adjustable Rate Mortgages that make a home affordable now, but not in three years (3/1) or five (5/1) (to most who took them, who were not savvy enough to refi out of them)…. Now GM becomes GMAC, others take breathalizers and grant loans…, those lending were not very knowledgeable or caring to tell the recipients what could happen in the future with the loan they were signing for, but the buyer/loan recipient should also have understood that their loan would change in 3 or 5 years and they may not be able to afford it. A lot of carelessness, live for now, don’t worry about the future, don’t consider changes in family numbers whether it be from babies, job losses, lifestyle changes….
One of the biggest downfalls to any business is Quantity over Quality! The above paragraph is basically that. Quantity over Quality.
Now in the Quantities of ARMS (Adjustable Rate Mortgages) starting to fluctuate. Homeowners with the ARMS start to not be able to afford the loan. (there were some and still are some that choose not to help the whole too; you know the ones that decide they do not want to pay for a home that is now worth less than they paid for it, decide to purchase plasma t.v.s, beautiful cars, appliances, clothing, etc…to make them look like “Hollywood”. I call it the “Hollywood Disease”). So now instead of everyone having a home with a loan they can afford for the long run of 30 years. There is an onset of foreclosures, then short sales, now major price drops! Now even the ones who are paying can not refinance because their home is not worth 20% more than the worth…creating a PMI (Private Mortgage Insurance) payment.
Now the banks are out of business, Bailouts have been given out with our taxes, people are losing their homes, the HOPE program requires people to be behind; it doesn’t give help immediately, they do not help most. (3% rate of modification) Banks/Institutions are demanding contracts on buyers without changes and telling consumers the way it is Taking away our freedoms, making the market worse!
Simple solution: With all that has occurred done and unchangeable! Make the banks modify, make the banks modify! Its worth a shot! Do you know what would happen if the Banks modified those who paid for 3 or 5 years the mortgage before it fluctuated and tried to keep it from being a foreclosure? At least tried…it would prevent further market price breaks, less foreclosures, less all across the board issues with Real Estate and Credit and homelessness?
Do you know that it is as simple as this? Modify the loans
Modify the loans! banks tried to give the loans, try to modify it to the original payment!! Guess what? would happen?
The banks would receive their payments for the next 27 years, less would be homeless, less devaluation……OMG! Where are the Peoples’ common sense??
and to finalize…. “What goes up must go down” Does that mean that things must go up?
